A company has two divisions.

CIMA F3 Question Answer

A is the manufacturing division and supplies only to B, the retail division.

The Board of Directors has been approached by another company to acquire Division B as part of their retail expansion programme.

Division A will continue to supply to Division B as a retail customer as well as source and supply to other retail customers.

Which is the main risk faced by the company based on the above proposal?

Suppliers to Division A will be opposed to the divestment and stop the acquisition.

The level of quality of the product will not be maintained by the acquired company.

Division A's going concern is highly dependent on its relationship with Division B as a retail customer.

Shareholders will be opposed to the divestment and stop the acquisition.

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